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Hong Kong and Macau

Jones Lang LaSalle: Hong Kong Maintains Top Ranking in Asia Pacific’s Real Estate Transparency Ratings

China becomes one of those with the greatest improvement

The 2010 Global Real Estate Transparency Index released today by Jones Lang LaSalle and LaSalle Investment Management revealed that Hong Kong stays as one of the most transparent markets in Asia Pacific, while China’s enhancement in regulations and information accessibility has made it one of the most notable improvers in the world.

The Transparency Index, which was first launched in 1999 and is updated every two years, reveals that there was a notable slowdown in the progress of real estate transparency worldwide over the past two years. The survey also suggests that the recent turmoil in global financial, economic and real estate markets has impacted on market behaviour, where real estate players focused on survival rather than market advancement.

Of the key components of real estate transparency, the transparency of the transaction process appears to have been compromised most by the more challenging real estate market conditions of the past two years.  More surprising is the evidence of a slowdown of progress in the transparency of real estate regulatory and legal environments.  The quality and depth of information on market fundamentals continues to improve nonetheless, helping to boost this dimension of transparency in most markets across the globe.

In light of the financial crisis, the 2010 Transparency Index has specifically assessed the transparency of the real estate debt markets in terms of the breadth and depth of data available on commercial real estate debt - originations, outstanding balances, maturities, and defaults as well as how thoroughly real estate debt on banks’ balance sheets is monitored.  Debt transparency varies vastly across the world.  In aggregate, countries tended to score lower on data availability than on the banking regulations, with even many developed countries lacking data availability on commercial real estate debt.

As for rankings, Australia is seen as the world’s most transparent market, pushing Canada into second place and the UK into third. While Europe achieved the highest scores in terms of real estate transparency, the Asia Pacific region has shown the most broadly based improvements in transparency over the past two years. Australia and New Zealand are the most transparent markets in the region, closely followed by Singapore and Hong Kong.

The Transparency Index also indicates that Hong Kong, which has long been a mature and transparent market, does not see a notable change in real estate transparency and stays on the second tier of Jones Lang LaSalle’s Global Real Estate Transparency Composite Index.  It is the fourth most transparent market in Asia Pacific, on a par with European countries, and ranks 18th among all markets surveyed globally.
GRETI 2010 - High Transparency Markets
Having said that, there is room for Hong Kong to improve its transparency.  One area being that the real estate lending process in Hong Kong is not as closely monitored as some of the Tier 1 Western countries.   Although time series of data on outstanding commercial real estate debt is available, there is an apparent lack of detailed info regarding debt maturities, debt originations, delinquency and default rates available to the public in Hong Kong. The situation is better regarding residential mortgage loans, but such information is relatively limited on commercial real estate loans.

Joseph Tsang, Head of Capital Markets for Jones Lang LaSalle in Hong Kong said, “In the past 12-18 months, the Hong Kong government has made good efforts in enhancing many primary residential sales related policy measures. This will for sure help improve Hong Kong’s market efficiency and transparency in the long run as they help regulate market practices, standardize definitions, facilitates a fairer and more informative market.  All these combined will allow end-users and investors to make more accurate and quicker buying decisions.”

“In general, we see Hong Kong moving towards a more transparent real estate market, and any future policy refining measures should aim at achieving a good balance between the interests of the buyers and the vendors. In addition, a more transparent leasing market is perhaps something to consider in the future.”

Looking at China, although there is still a way for it to catch up with Hong Kong and other mature markets, it is among the most notable improvers in the region as well as around the world. Solid improvement has been observed in the country over the past two years, particularly for Tier II cities such as Chengdu and Tianjin as well as Tier III cities such as Zhengzhou and Wuxi, all of them shifted from the Low-Transparency to a Semi-Transparent level.

KK Fung, Managing Director of Greater China at Jones Lang LaSalle remarked, “One key area that saw notable improvement in China is the availability of market statistics.  Longer and more comprehensive historic data series are now available not only in Tier I cities, but also in the lower tier cities, and across different property sectors. This will facilitate more sophisticated market analysis and leading to better investment decisions.”

Other improvements include more consistent and open implementation of real estate regulations across China. One example is that real estate taxes are all more widely implemented and enforced. The deal-making environment for investors has also improved with better access to title records and land registry information.

“In the future, new laws and better regulatory enforcement will further improve transparency in China, and leading to a more active investment market. However, how consistently new rules are applied and enforced in lower tier cities will determine the growth momentum and popularity of these emerging markets. In the meantime, the investment and operating environments of the leading cities will remain more favourable, but growth opportunities in the Tier II and Tier III cities should not be overlooked alongside with their gradual improvement in market transparency.” said KK Fung.

The last two years demonstrate how high levels of transparency certainly do not eliminate risks for investors or occupiers. “However the real value of transparency should become evident when comparing how quickly markets are able to open up again after a financial crisis. Looking ahead, regulators will emphasise the importance of greater disclosure in order to gauge the credit-worthiness of commercial real estate and to evaluate the sector’s ability to carry debt. As these steps are put in place, we expect the transparency of real estate debt, and hence all real estate capital markets, to rise,” concluded Marcos Chan, Head of Research, Greater Pearl River Delta at Jones Lang LaSalle.

– ends –

Highlights of The 2010 Global Real Estate Transparency Index
The average improvement in real estate transparency across the 81 markets covered by the survey has halved in 2008-2010, when compared to the 2006-2008 and 2004-2006 period, with Australia leading the global stage and Asia Pacific showing the best improvement in regional transparency. 

Asia Pacific

The Asia Pacific region has shown the most broadly based improvements in transparency over the past two years.  Australia and New Zealand are the region’s most transparent markets, closely followed by Singapore and Hong Kong. Rising levels of transparency are associated with rising levels of foreign direct investment, a powerful incentive for encouraging the free flow of information and the fair and consistent application of local property laws. It is in India and China where the region’s greatest improvements in transparency has been recorded, a trend that has now filtered across India and China’s secondary and tertiary cities which have shifted from the Low-Transparency to a Semi-Transparent level. 

The big improvement for China and India has been mainly due to increased data availability and ongoing regulatory changes.  In both markets, the recent boom in real estate markets has greatly contributed to the improvements, as both public and private sector players have taken important steps forward to promote greater levels of transparency.  International corporate occupiers and investors are increasingly demanding better information on market fundamentals, while government agencies and market regulators have made slow but steady progress on the regulatory and legal front.  Indian cities in each city-tier are now considered slightly more transparent than their Chinese counterparts. However, the two emerging economic giants of the region remain very close in terms of overall real estate transparency.

In terms of the sub-index categories, Asia Pacific has continued to record steady progress over the last two years in relation to market fundamentals, mainly due to improvements made by China and India, as well as Macau. Asia Pacific has also continued to make good progress on the regulatory and legal front, not only in China and India but across South East Asia as a whole.

The economic downturn and difficult financial market conditions are likely contributors to the extent of improvement in transparency for most markets between 2008 and 2010. For example, the steady growth of the real estate investment trust (REIT) sector in Asia in recent years contributed to earlier improvement in transparency, but the market has been stagnant since 2008, with few initial public offerings in major markets. There has also been a steep decline in real estate investment transactions over the last two years.


Europe shows a mixed picture of transparency. Turkey and some CEE markets have shown good progress, as their markets become more internationally traded and their regulatory and legal environments become aligned with core EU economies.  In fact, the more advanced CEE countries like Poland, Czech Rep and Hungary have now caught up with the least transparent markets in Western Europe, such as Italy and Austria, which have struggled to improve real estate transparency. Further east in Russia and the Ukraine, transparency improvements have stalled in 2010, a reflection of the severity of the real estate downturn in both markets, and in sharp contrast to the strong improvements registered in 2008.

The Americas

The Americas markets have shown more modest changes in transparency.  Transparency improvements have stalled in the region’s two most transparent markets, the United States and Canada, as well as in most Latin American markets. Canada and the United States have however remained the region’s only two Highly-Transparent (Tier 1) countries, and rank among the world’s most transparent markets. Only Brazil registered a notable improvement, while Venezuela which showed a sharp deterioration between 2006 and 2008 has seen a further weakening in 2010.


Markets in the MENA region, which were highlighted in our 2008 Index for their strong progress in transparency, have had a set back in 2010.  A number of Gulf markets have registered deterioration in transparency, including Kuwait, Dubai and Bahrain.  Pakistan has also struggled to maintain even poor transparency levels.  Dubai, which was rocked particularly hard by the real estate crisis, epitomises the region’s struggle to improve transparency levels. 

Real Estate Debt Transparency

In the future, regulators will rightfully emphasize the importance of more disclosure in order to gauge the credit-worthiness of commercial real estate and to evaluate the sector’s ability to carry debt.  As these steps are put in place, it is expected the transparency of real estate debt, and hence all real estate capital markets, will rise.  But it is not likely that the inherent cyclicality of real estate will ever be eliminated.

The major debt related news story in MENA was the Nakheel group failing to make its debt service payments on Dubai World in 2009. Since this happened, the region is rethinking how real estate properties should be financed. A debt restructuring proposal for Dubai World has been released which addresses how the government will deal with excessive debt and the oversupply of property from large overbuilding over the past 8 years. Although this proposal represents progress, most real estate debt in the region has been downgraded, especially in Dubai.

Across much of Asia Pacific, there is still a lack of clarity on the size of total outstanding commercial real estate debt, and more detailed information is generally not easily available. Even in Australia, information on real estate debt markets is not easily available from a central source as it comes from various sources such as REITs, commercial banks, the central bank and credit rating agencies. However, the poor availability of information on commercial real estate debt is less of an issue in the region than for Europe or the Americas, as real estate players in the Asia Pacific region generally rely on banks and not the debt market for real estate financing. Similarly, less stringent oversight of commercial real estate lending by bank regulators has not led to severe problems as the region has emerged relatively unscathed from the global financial crisis.

The last two years demonstrate how high levels of transparency certainly do not eliminate risks for investors or occupiers. However the real value of transparency should become evident when comparing how quickly markets are able to open up again after a financial crisis.
Notes to the Editor
First launched in 1999 and updated every two years, the Jones Lang LaSalle Global Real Estate Transparency Index illustrates real estate market transparency across 81 markets worldwide with the aim to help investors, corporate occupiers and retailers anticipate challenges of the market. It is also a helpful gauge for governments and industry organisations who are interested in improving transparency in their home markets. The Global Real Estate Index identifies the fastest moving markets over the past two years, and presents the top-ranking markets in each of the five transparency categories - Performance Measurement, Market Fundamentals, Listed Vehicles, Legal and Regulatory Environment and Transaction Process.  Experts from the disciplines of accounting, finance and law have also been consulted, especially in emerging markets, in order to supplement Jones Lang LaSalle’s real estate knowledge.

To access the Global Transparency Report, including detailed regional breakdown, rankings, graphs and detailed methodology please visit


The 2010 Survey consists of 20 major questions that set out to objectively determine relative real estate transparency across the world. The 20 questions have a five choice answer (1-5); answering ‘1’ means the market is Highly-Transparent; an answer of ‘5’ corresponds to an Opaque market.

The Composite Transparency Index scores range on a scale from 1.00 to 5.00. A country or market with a perfect 1.00 score has total real estate transparency; a country with a 5.00 score has total real estate opacity.  Countries markets are assigned to one of five transparency tiers as follows:
  • Tier 1: Highly-Transparent
Total Composite Score: 1.00–1.49
  • Tier 2: Transparent          
Total Composite Score: 1.50–2.49
  • Tier 3: Semi-Transparent
Composite Score: 2.50–3.49
  • Tier 4: Low-Transparency
Total Composite Score: 3.50–4.49
  • Tier 5: Opaque
Total Composite Score: 4.50–5.00